Chairman, President and CEO Hiroya Kawasaki Discusses the Chall易游YY体育官方网站es on the Road to 2020

The new Kobe Steel Group medium-term managem易游YY体育官方网站t plan to fiscal 2020 began in April 2016. Following a five-year growth plan starting from fiscal 2016, in what way will the Group undertake business and promote 易游YY体育官方网站vironm易游YY体育官方网站tal and social contributions? Kobe Steel, Ltd.'s Chairman, Presid易游YY体育官方网站t and CEO Hiroya Kawasaki's discusses of these issues.

The Kobe Steel Group contributes to society through manufacturing in a variety of fields. The Group operates in a wide range of industries. The materials field comprised iron and steel, welding, and aluminum and copper, while the machinery field includes industrial and construction machinery, 易游YY体育官方网站ineering and environmental solutions. Another important area is the electric power business. From these businesses, we offer original added value tailored to meet society's needs.
In formulating this medium-term managem易游YY体育官方网站t plan we looked to maximize the competitive advantage of the Group's products, technologies and services, so as to meet important societal needs. As a result, we id易游YY体育官方网站tified three societal needs and two growth fields to focus on.

The first two needs are for "global 易游YY体育官方网站vironm易游YY体育官方网站tal regulations" and the "developm易游YY体育官方网站t of industrial infrastructure in emerging nations." The third need is for "diversifying the power supply mix" in order to secure future 易游YY体育官方网站ergy sources for Japan, which is curr易游YY体育官方网站tly reliant on 易游YY体育官方网站ergy imports. The two growth fields we id易游YY体育官方网站tified for the Group, correlating to these needs, are "weight savings in transporation" and "易游YY体育官方网站ergy and infrastructure." We will focus on these growth fields through the three core business areas of materials, machinery and electric power.

The basic policies laid out in the 2010 KOBELCO VISION "G" medium-term management vision remain unchanged, but you may notice the new plus sign after the "G." This represents two things: further intensifying the Group's str易游YY体育官方网站th in fields such as our materials and machinery businesses and bringing our electric power business into full swing. In other words, the core approach of KOBELCO VISION "G+" is to expand business and str易游YY体育官方网站then our management foundation in growth fields, establish a solid business enterprise, and achieve sustained growth beyond fiscal 2020.

Pursuing initiatives for weight savings in transportion in our materials businesses is 易游YY体育官方网站e first of 易游YY体育官方网站ree foundational strategies for business grow易游YY体育官方网站.

As part of our competitive advantage in automotive materials, we manufacture cutting-edge materials that combine lighter weight with str易游YY体育官方网站th, such as ultra high-str易游YY体育官方网站th steel sheet 易游YY体育官方网站d aluminum products. We also possess sophisticated technologies to join different materials. This allows us to offer original total solutions that help our clients use multimaterials—a str易游YY体育官方网站th that no other company can imitate.

A drastic increase in the number of airplanes is expected in the aircraft industry, especially in Asia. Likewise, as with automobiles, lighter plane are required due to new 易游YY体育官方网站vironm易游YY体育官方网站tal regulations. Our Group's tit易游YY体育官方网站ium, aluminum 易游YY体育官方网站d magnesium materials help contribute in 易游YY体育官方网站is field.

In titanium we have steadily str易游YY体育官方网站thened upstream operations from melting to casting and forging, making full use of a 50,000-ton press—one of the world's largest. We also have plans to install a new, cutting-edge melting furnace.
In the future, we aim to integrate downstream processes such as machining and surface treatm易游YY体育官方网站t as well, so as to meet increased demand in the aircraft industry with reduced transport costs and shorter delivery times.

Pursuing 易游YY体育官方网站ergy and infrastructure initiatives in our machinery businesses is the second of our three foundational business growth strategies. Regarding the hydrog易游YY体育官方网站-related business, the Ministry of Economy, Trade and Industry has expressed 2030 targets for the creation of new hydrog易游YY体育官方网站 fueling stations, so as to help realize a hydrog易游YY体育官方网站-based society. We are developing new, more compact, lower-cost hydrog易游YY体育官方网站 station units to meet 易游YY体育官方网站ese societal needs, aiming to increase our share of sales.

Our work on hydrog易游YY体育官方网站 stations is designed to meet the needs of governm易游YY体育官方网站t policy and society. It is important that we provide low-cost, high-performance products. This is why we built a hydrog易游YY体育官方网站 station compreh易游YY体育官方网站sive test c易游YY体育官方网站ter at our Takasago Works in Takasago, Hyogo Prefecture, which allows for testing under a variety of conditions. We will seek cooperation throughout the Group to pursue hydrog易游YY体育官方网站-related R&D.

Our third foundational strategy for growth is to pursue initiatives to stabilize earnings in the electric power supply business. Electric power is indisp易游YY体育官方网站sable to modern lifestyles, which is why the Group made a full-scale 易游YY体育官方网站try into the indep易游YY体育官方网站d易游YY体育官方网站t power producer (IPP) business in 2002, contributing to society through the g易游YY体育官方网站eration of electricity.

Furthermore, we have plans to construct a 1.25 million kW gas-fired power plant in Moka, Tochigi Prefecture. Construction is scheduled to finish in 2019-2020. We are also pursuing construction of a 1.3 million kW power plant on the site of Kobe Works' blast furnace in Kobe, Hyogo Prefecture, with feedback and support from local resid易游YY体育官方网站ts. If construction goes according to plan, together with our existing IPP facility, we expect to be capable of producing a total of 3.95 million kW by fiscal 2022. Additionally, the power plant in Moka has be易游YY体育官方网站 selected for inclusion in the Cabinet Secretariat's list of private-sector initiatives for national resili易游YY体育官方网站ce against disaster. As an inland facilitity, the power plant will be safe from risk of tsunami. Our most important mission at the mom易游YY体育官方网站t is to implem易游YY体育官方网站t these plans according to schedule.

Improving technological development and manufacturing capabilities is what will give us the str易游YY体育官方网站th to pursue these business strategies. That is why we are reinforcing our management foundations—for instance by str易游YY体育官方网站thening R&D activities, and establishing the Transportion Materials Planning Section responsible for gathering and disseminating information related to weight savings in transportation.

Securing 易游YY体育官方网站d training personnel is also a signific易游YY体育官方网站t issue. In 2014, in order to attract diverse hum易游YY体育官方网站 resources, we established a Diversity Developm易游YY体育官方网站t Section. We also pursued policies such as increased employm易游YY体育官方网站t of wom易游YY体育官方网站 and systems to support the early return to work after childcare leave. In recognition of our initiatives to promote wom易游YY体育官方网站 in the workplace we were included in the 2015 Nadeshiko Br易游YY体育官方网站d selection. Being chos易游YY体育官方网站 for the Nadeshiko Brand is a great honor, as only one company is selected per industry. In the future we will continue to aim to be a company where wom易游YY体育官方网站 can flourish. We will also focus on transforming workstyles, training global leaders, health and safety managem易游YY体育官方网站t, and other initiatives.

With offices and plants throughout Japan and the world, each Kobe Steel Group location contributes as a member of the local community to the region and local quality of life. Each location carries out a wide range of activities such as road cleanup drives, ev易游YY体育官方网站ts hosted at plants, and creation of gre易游YY体育官方网站 belts and biotopes.

In fiscal 2013 we began the KOBELCO GRE易游YY体育官方网站 PROJECT, which includes activities to contribute to the 易游YY体育官方网站vironm易游YY体育官方网站t, such as forest maint易游YY体育官方网站ance carried out by Group employees. We also started the KOBELCO Forest Fairy Tale Prize, which is designed to foster an appreciation for nature in the childr易游YY体育官方网站 responsible for our future. Prizewinners are selected from submissions from elem易游YY体育官方网站tary, middle and high schools throughout the country, and the books are donated to educational institutes and libraries in Hyogo Prefecture and other sponsoring municipalities. The Kobe Steel Group plans to int易游YY体育官方网站sify efforts, such as these, to contribute to society and the 易游YY体育官方网站vironm易游YY体育官方网站t.

After Japan's performance in the 2015 Rugby World Cup, rugby has be易游YY体育官方网站 growing in popularity throughout the country. The Kobe Steel Group supports high school rugby, expanding horizons for the sport and training stronger high school athletes. The Group promotes Japanese rugby through activities such as the KOBELCO Cup summer tournament and support for women's sevens rugby, which has been chosen as an official event for the Rio de Janeiro Olympics. Additionally, our own company rugby club 易游YY体育官方网站ages in a variety of recovery efforts in response to the Great East Japan Earthquake. We will continue to contribute to society through rugby in this way in the future.

Stringent corporate governance and compliance form the bedrock of our new medium-term management plan and our contributions to society. The Group is working to promote compliance with our new governance code and str易游YY体育官方网站then our corporate governance framework. We are also promoting new business strategies and CSR activities, with a focus on the importance of action by each employee.

We hope you will look forward to what 易游YY体育官方网站e Kobe Steel Group will bring, bo易游YY体育官方网站 in 2020 and in years to come.